Prospects for a Currency Board in Iceland

Alexander Mabie
Additional contact information
Alexander Mabie: The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

No 45, Studies in Applied Economics from The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise

Abstract: In October 2008, Iceland suffered the biggest banking crisis in history relative to the size of an economy. Its three main banks, Glitnir, Kaupthing, and Landsbanki, were not able to avoid the deterioration in global financial markets following the September collapse of Lehman Brothers. Ever since, many economists have questioned whether a floating currency issued by the Central Bank of Iceland (CBI) is the most suitable monetary system for the Nordic island, or if it is time for Iceland to abandon the kroná (ISK) and adopt a new monetary regime. This paper examines the prospects of introducing several alternative monetary regimes in Iceland, namely a currency board system. In doing so, it presents a comparison of each regime’s past performance in Iceland (if applicable) and elsewhere as well as each regime’s potential effects on exchange rate dynamics. Lastly, it explores what might constitute an exchange rate that would be sustainable for a currency board.

Keywords: Iceland; financial crisis; currency board; dollarization; nominal GDP targeting (search for similar items in EconPapers)
JEL-codes: E58 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2016-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://sites.krieger.jhu.edu/iae/files/2017/04/Alexander_Mabie_Iceland.pdf Full text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:jhisae:0045

Access Statistics for this paper

More papers in Studies in Applied Economics from The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise Contact information at EDIRC.
Bibliographic data for series maintained by Steve H. Hanke ().